UNION BANK OF INDIA vs M/S.Chennai Elevated Tollway Limited on 2 February 2023

1. Union Bank of India, Industrial Finance Branch, 139, Broadway, 1st Floor, Chennai – 600 108. Rep. by its Chief Manager [On its behalf and on behalf of M/s.Andhra Bank (Applicant No.2) which stood merged with Applicant No.1}

2. Bank of Baroda, CFS Hyderabad Branch, 3-6-262/6, Tirumala Estates, 1st Floor, Himayat Nagar, Hyderabad – 500 029 Rep. by its Asst. General Manager

3. Bank of Maharashtra, Asset Recovery Branch H.No.4-3-448 to 465 & 468 1st Floor, Vincothna Pittle’s Majesty Gopal Bagh, Near Bank Street, Koti, Hyderabad – 500 001 Rep. by its Asst. General Manager

4. Central Bank of India, Corporate Finance Branch, Bank Street, Koti, Hyderabad – 500 001 Rep. by its Asst. General Manager

5. Punjab National Bank,

[erstwhile Oriental Bank of Commerce]

Zonal Sastra Office,

6-3-865, 1st Floor, My Home Jupally,

Ameerpet, Green Land,

Hyderabad – 500016. Rep. by its Assistant General Manager [Oriental Bank of Commerce, Applicant No.5 and United Bank of India, Applicant No.9 stood merged with Applicant No.5]

6. State Bank of India, SAMB, 5th Floor, Rear Block of HMWSSB Compound, D.No.6-2-915, Khairatabad, Hyderabad – 500 004 [Representing State Bank of Bikaner & Jaipur and State Bank of Travancore, since merged on 01.04.2017] Rep. by its Asst. General Manager

7. UCO Bank, International Banking Branch, 328, Thambu Chetty Street, 3rd Floor, Chennai – 600 001 Rep. by its Dy. General Manager

. . . Applicants [AS PER AMENDED CAUSE TITLE]

Versus

1. M/s. Chennai Elevated Tollway Limited Rep by its Managing Director, Regd. Off: Plot No.14, Avenue-4, Banjara Hills, Hyderabad – 500 034 Telengana

Also At:

No.27/3, Mayor Ramanathan Road, Formerly Spur Tank Road], Chetpet, Chennai – 600 031.

2. The National Highways Authority of India Rep. by its Chairman, Principal Office: G-5 & 6, Sector 10, Dwarka New Delhi – 110 075.

3. M/s. Soma Enterprise Limited Rep. by its Authorized Signatory Regd Off. At: “Soma Heights”, 3, Siddhi Vinayak Society, Karve Road, Pune – 411 038 Maharashtra

4. M/s.Aarvee Associates

Architects, Engineers & Consultants Pvt. Ltd Rep. by its Authorized Signatory Ravule Residency, Srinagar Colony Main Road Hyderabad – 500 082

5. Mr.Ankineedu Maganti

Director, M/s. Chennai Elevated Tollway Limited &

1054, Road No.46, Jubilee Hills,

Hyderabad – 500 033

Telengana

6. Mr.Ramesh Kumar Boppana

Director, M/s. Chennai Elevated Tollway Limited&

M/s. Soma Enterprise Limited

Plot No.294, Road No.78, Phase III, Jubilee Hills, Hyderabad – 500 033

Telengana

7. Mr.Ramchandra Rao Patri

Director, M/s. Chennai Elevated Tollway Limited 82/1, Aemilia – 1, 8th Floor, Lantana Street, Sohna Road, Vatika City, Gurgaon – 122 001, Haryana

8. Mr.Rajendra Prasad Maganti

Director, M/s. Chennai Elevated Tollway Limited &

M/s.Soma Enterprise Limited

1054, Road No.46, Shaikpet, Jubilee Hills, Hyderabad – 500 033

Telengana

9. Mr.Mallikarjuna Prabhakara Varaprasad Mallineni Director, M/s.Soma Enterprise Limited Plot No.3, Siddhi Vinayak Society, NR

Karve Statue, Kothrud, Pune,

Pune – 411 038

Maharashtra

10. Mr.Satish Chandramouli Panthula

Director, M/s.Soma Enterprise Limited

HIG- 77, Moosapet, Bharat Nagar Colony,

Hyderabad – 500 018

Telengana . . . Defendants

Counsel for Applicants :- M/s.M.Muthuperiasamy & Ms.M.Geethapriya

By this final order, the claim of the applicant banks for recovery of a debt of Rs.1073,46,10,739.49p as on 31.08.2018 is being disposed of. At the time of filing of the claim petition, there were nine applicant banks. However, after the mergers and amalgamations, the 2nd applicant Andhra Bank merged with the 1st Applicant Union Bank of India and Applicant No.6 & 9 M/s. Oriental Bank of Commerce and United Bank of India, merged with M/s. Punjab National Bank which is the Applicant No.5 in the amended cause title. Thus there are seven applicants now.

1.1.

FACTS OF THE CASE:

All the applicants the body corporate Banks constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. It is pleaded by the Applicants that the Government of India, conceived and approved a new four lane elevated road from Chennai Port [10th gate] to Maduravoyal measuring a length of 18 kms in Tamilnadu under NHDP Phase VII and entrusted it to The National Highways Authority of India viz., the 2nd Defendant. The entrustment consists of designing, engineering, financing, procuring, constructing, operating and maintaining the said four lane elevated road. The 2nd Defendant pre-qualified the 3rd Defendant and called for participation in the bid vide its letter dated 04.11.2008.

1.2 The 2nd Defendant accepted the proposal quoting a grant of Rs.499.30 crores and declared the 3rd Defendant as the selected bidder and issued a Letter of Award on 06.01.2009. Vide the said Letter of Award the 3rd Defendant was required to acknowledge the said Letter of Award within 7 days and execute Concession Agreement with the 2nd Defendant, within 45 days from the date of issue of the Letter of Award. The 3rd Defendant was further required vide the same Letter of Award, to incorporate a Special Purpose Vehicle solely for the purpose of domiciling the project. Consequently, the 3rd Defendant promoted the 1st Defendant on 02.02.2009 to act as the Special Purpose Vehicle and perform the obligations and exercise the rights of the 3rd Defendant including entering into the Concession Agreement with the 2nd Defendant. The Memorandum and Articles of Association dated 02.02.2009 and Certificate of Incorporation dated 16.02.2009, in evidence of the promotion of the 1st Defendant are produced with the O.A.

1.3 It is pleaded that after passing proper resolutions on 21.02.2009 by the Board, the 1st Defendant was enabled to enter into the Concession Agreement with the 2nd Defendant to construct the said four lane elevated road on Build, Operate and Transfer [BOT] [TOLL] basis. The terms ‘BOT’ and ‘DBOFT’ mean the same intent, more fully explained in the Concession Agreement dated 18.05.2009 entered into between the 1st and 2nd Defendants. Vide the same resolution 8th Defendant was authorized to issue Letters of Authorization/sign Power of Attorney on behalf of the 1st Defendant and a Letter of Authorization was issued in favour of 5th Defendant to receive, reply to the communications, notices and discharge other responsibilities as noted in the Letter of Authorization, required in implementing the project. Further, 1st Defendant was also enabled to accept Rs.6,55,580/- from the 3rd Defendant against Memorandum Shares, towards incorporation and initial establishment expenses of the 1st Defendant and allot 6558 Equity Shares of Rs.100/- each to the 3rd Defendant. Thus the 3rd Defendant became the promoter as required by the Letter of Award and acquired shares in the 1st Defendant Company. 1.4 It is further pleaded by the Applicants that in furtherance of implementing the project, the 1st Defendant and the 2nd Defendant entered into a Concession Agreement on 18.05.2009 on DBOFT basis [Design, Build, Finance, Operate and Transfer]. For the sake of brevity, the 2nd Defendant, as per the said Concession Agreement, is called the “Authority” and the 1st Defendant is called “The Concessionaire”. Vide Clause 3.1.1, of the Concession Agreement the 2nd Defendant granted to the 1st Defendant the concession of exclusive right, license and authority to construct, operate and maintain the project [Road] for a period of 15 years and the same was accepted by the 1st Defendant. Vide Clause 5.1.1 of the said Concession Agreement, the 1st Defendant shall, at its cost and expense, procure finance for and undertake the implementation of the project as said above.

1.5 It is the case of the Applicants that pursuant to the conditions stated in Clause 5.1.1 of the Concession Agreement, the 1st Defendant approached the Applicant banks (Which are nine in numbers including that of the merged banks) for a Term Loan. The Applicant banks sanctioned a sum of Rs.1610 crores for the purpose as detailed below:

Sl.No Name of the Bank Limit in Rs. [in crs]

1. Union Bank of India 380.00

2. Andhra Bank (Merged with Applicant No.1) 120.00

3. Bank of Baroda 120.00

4. Bank of Maharashtra 100.00

5. Central Bank of India 120.00

6. Oriental Bank of Commerce - Now merged with Punjab National Bank. 250.00

7. State Bank of Bikaner and Jaipur (Now State Bank of India) 120.00

8. State Bank of Travancore(Now State Bank of India) 120.00

9. UCO Bank 160.00

10. United Bank of India - Now merged with Punjab National Bank. 120.00

Total 1610.00

1.6 The Applicants submit that the Applicant banks formed a consortium vide an Inter-Creditor Agreement dated 02.11.2009 and designated the 1st Applicant bank as the Lender’s Agent, Security Agent and Escrow Bank, in order to comply with the terms and conditions stipulated in the Common Loan Agreement. Besides various other financial documents as detailed below were executed for accomplishing the purposes mentioned therein:

Sl.No Date Nature of Document Parties

02.11.2009 Common Loan Agreement, supported by

Resolutions passed by the 1st Defendant on 15.10.2009 Applicant Banks, 1st Applicant Bank as the Lenders Agent & Security Agent and the 1st Defendant

31.03.2015 Supplementary Common Loan Agreement Applicant Banks, 1st Applicant Bank as the Lenders Agent & Security Agent and the 1st Defendant

02.11.2009 Consent Agreement 1st Applicant Bank as Security Agent, 1st Defendant and 3rd Defendant

02.11.2009 Lenders Agent Agreement Applicant Banks, the 1st Applicant Bank as the Lenders Agent and the 1st Defendant

02.11.2009 Security Agent Agreement Applicant Banks, 1st Applicant Bank as the Lenders Agent & Security Agent and the 1st Defendant

02.11.2009 Letter of Confirmation to the Inter-Creditor Agreement 1st Defendant in favour of the Applicant Banks

02.11.2009 Memorandum of Operating Procedure [as amended on 31.03.2015] Applicant Banks, 1st Applicant Bank as the Lenders Agent, Escrow Bank and the 1st Defendant

02.11.2009 Deed of Hypothecation Executed by the 1st Defendant in favour of the Applicant Banks represented by the 1st Applicant Bank as Security Agent

02.11.2009 Agreement for Pledge of Shares, supported by Resolution dated 08.10.2009 passed by the 3rd Defendant Executed by the 3rd Defendant in favour of all the Applicant banks with duly signed blank transfer deeds

02.11.2009 Letter of Deposit of Share Certificates by 3rd Defendant

02.11.2009 Power of Attorney Executed by 3rd Defendant in favour of the 1st Applicant Bank, in the capacity of Security Agent

1.7 It is averred that by virtue of the Deed of Hypothecation dated 02.11.2009, the whole of the movables including all current and non-current assets, machinery, equipment, tools, accessories, vehicles, both present and future more fully described therein stood hypothecated to the Applicant Banks. Apart from executing various documents as stated above, the debt has been acknowledged by executing Debit Balance Confirmations and Revival Letters on various dates the last of which was executed on 27.12.2016 and thus the debt is not hit by limitation and stands enforceable as on date of filing of the OA. This apart, the charge in favour of the Applicant Banks has been registered with ROC, Hyderabad and is subsisting as on 02.11.2009. The 3rd Defendant has executed a Letter of Undertaking on 02.11.2009 in favour of the Applicant Banks. Thus, as per the said Letter of Undertaking, the 3rd Defendant is also liable for the payment of dues by the 1st Defendant.

1.8 The Applicants further submitted that another substitution agreement dated 30.12.2009 is entered in order to safeguard the interest of the lenders by transferring and substituting the concession granted by the 2nd Defendant in favour of the 1st Defendant, to a nominated company in accordance with the provisions of this agreement and the Concession Agreement was also entered into by and amongst the Defendants 1 & 2 and 1st Applicant Bank as the Lenders agent. Further, as per the requirement of the Concession Agreement, an Escrow Agreement was entered into on 04.01.2010 by and amongst the 1st Defendant, the 1st Applicant as Lenders Agent & Escrow Bank and the 2nd Defendant. This Escrow account, as per Clause 2.1.1 is to enable the Escrow Bank to act as a trustee for the 1st, 2nd Defendants and the 1st Applicant Bank, as the Lenders Agent, besides complying with various other conditions mentioned therein including maintaining sub accounts under the Escrow Agreement.

1.9 It is averred that as per the Schedule VIII of the Common Loan Agreement the loan provided by the members of the consortium viz., the Applicant Banks shall bear interest at 11% fixed from the date of initial disbursement to COD [Commercial Operation Date]. This apart in terms of clause 2.6[iii] of the said agreement, Default Interest at 1% p.a. can be charged. Further, in terms of clause 2.6[iv] of the said agreement Deviation Fee at the rate of 1% on the outstanding amount, during the period of deviation, can be charged. Again in terms of clause 2.6[v] of the said agreement a Commitment Fee at the rate of 1% can be charged. 1.10 The Applicants submit that in terms of clause 2.11[i] of the Common Loan Agreement, repayment of the loan in 40 step up quarterly installments shall commence after moratorium of 7.5 months from COD or from 30.06.2013 whichever is earlier. As per clause 1.1 of Article I of the said agreement the date of COD is 15.11.2012 whereby the repayment should commence from 30.06.2013. Accordingly, the entire loan amount of Rs.1610 crores should be repaid by quarterly installments as per Schedule IV of Common Loan Agreement dated 02.11.2009 to each of the Applicant Banks from 30.06.2013 to 31.03.2023. Then the date of commercial operation [COD] was refixed at 14.09.2015 vide Supplementary No.1 to Common Loan Agreement dated 31.03.2015. Thereafter, the repayment was recast to run from 30.06.2013 to 31.03.2025. This is furnished in Article III, Cl.3.1-I of the Supplementary No.1 to the Common Loan Agreement dated 31.03.2015. 1.11 The Applicants state that the Concession Agreement, vide its Clause 37.2.1, provides for termination of it on account of [Authority Default] viz., the 2nd Defendant’s default. So also, the Concession Agreement, vide its clause 37.1 provides for termination of it on account of Concessionaire’s default. In terms of clause 37.3.2[a] of the Concession Agreement, the 2nd Defendant shall pay to the 1st Defendant an amount equal to the debt due, due to Authority’s default.

1.12 The Applicants state that that the construction work of the project [Sec.1] was stopped on 29.03.2012, consequent to the “stop order” issued by the Water Resources Department of the Government of Tamilnadu. Subsequently, no work took place in the project. After the stoppage of work the 1st Defendant, issued termination notice as per clause 37.2.1 of Concession Agreement on 18.01.2016 on the 2nd Defendant. So also, the 2nd Defendant served a notice of termination on the 1st Defendant on 08.04.2016. The 4th Defendant has upheld the validity of the termination notices issued by both the 1st and 2nd Defendants vide clause 5.1 of its report dated 06.02.2018. Accordingly, the 4th Defendant has worked out the amount payable by the 2nd Defendant to the 1st Defendant by a sum of Rs.807.16 crores vide clause 9.3 of its Report dated 06.02.2018. It also has arrived at the amount payable by the 1st Defendant to the 2nd Defendant and the same is stated to be Rs.108.46 crores as per clause 9.4.6 of the said report. In the circumstances, the 2nd Defendant is liable to pay Rs.807.16 crores to the 1st Defendant. In any case, the 1st Defendant by virtue of the Common Loan Agreement and Supplement No.I to the Common Loan Agreement; the 2nd Defendant by virtue of the Authority’s default as upheld by the 4th Defendant herein and the 3rd Defendant by virtue Clause 3[a] & [b] of its stamped undertaking dated 02.11.2009 have become liable jointly and severally to pay the debt due to the Applicant banks.

1.13 The Applicants state that out of the total amount of loan viz., Rs.1610/- crores sanctioned, the 1st Defendant had availed around Rs.852 crores. As default occurred on account of non-payment of the dues by the 1st Defendant, despite demands, all the Applicant Banks classified the loan account as NPA on various dates. The 1st Applicant bank as the Leader of the Consortium and the Lenders Agent issued a pre-suit notice on 14.07.2018 on Defendants 1 to 4 herein, through its lawyer, demanding payment of Rs.1034,22,12,558.74 found to be outstanding as on 30.04.2018 from 1st to 3rd Defendants jointly and severally within 15 days of receipt of the notice, but to no avail. 1.17 It is averred that the actual amount of loan released by the Applicant Banks is Rs.841.37 crores. As per the repayment schedule detailed in “Supplementary No.I to the Common Loan Agreement [D-11]” the revised period of repayment is to run from the quarter ending 30.06.2013 to 31.03.2025. In terms of this revision of period of repayment, as per to Art.III, Clause 3.1-I of the Supplementary No.I to the Common Loan Agreement, the 1st Defendant should have paid Rs.180 crores from 30.06.2013 to 31.08.2018, whereas the 1st Defendant has paid Rs.38.40 crores only upto 31.08.2018. Taking into account the amount of loan released and the repayment ought to have been made upto 31.08.2018, the outstanding balance in the loan accounts put together should have been Rs.661.37 crores only whereas the outstanding due as of 31.08.2018 is Rs.1072,67,38,510.49. It is also alleged that the 1st Defendant committed default in having alienated, without notice to and/or permission from the Applicant banks, the non-current assets consisting of property, plant and equipment etc. which stood at Rs.1014,04,95,630/- crores as of 31.03.2015. As per the Audited Balance Sheet dated 31.03.2017, the said asset is not available. Thus the 1st Defendant has deprived the Applicant Banks of a substantial part/value of the security covered under the Deed of Hypothecation, unlawfully, for which the Applicants reserve their right to initiate appropriate legal action against the Defendants concerned.

1.14 The Applicants state that vide the minutes dated 08.03.2018 of the Joint Lenders Meeting held on 07.03.2018 at Hyderabad, the 1st Applicant Bank viz., the Lenders Agent and the leader of consortium has been authorized to take legal action including filing of this O.A.

1.15 The Applicant Banks submit that the Defendants 1 to 3, are jointly and severally liable to pay the entire dues to the Applicant Bank. The Applicant Banks submit that the interest is charged and capitalized on monthly rests as per the loan agreements/guidelines/directives issued by the RBI/Central Office of the Bank. It is further stated that the transaction being commercial, they are entitled to claim contractual rate of interest/penal rate chargeable as per the directives of the RBI. It is further submitted that no part of the penal interest is capitalized. It is alleged that as of 31.08.2018 the claim of the Applicant Banks against the Defendants 1 to 3 towards principal and the subsequent interest and charges is a sum of Rs. 1073,46,10,739.49 as detailed below:

A. Principal: Term Loan from

1st Applicant- A/c.No: 530706390000281 :Rs.164,34,22,581.00 2nd Applicant- A/c.No:020530100006180

A1 Bank 3rd Applicant – A/c.No:25210600000252 :Rs. 60,88,89,237.00 4th Applicant – A/c.No:60038662329

:Rs. 50,25,03,853.16 5th Applicant – A/c.No:3062452002

:Rs. 58,14,77,146.00 6th Applicant – A/c.No:10417021000334 :Rs.127,09,43,119.00 – Now merged with PNB 7th Applicant – A/c.No:61088521347[SBBJ] :Rs. 66,91,21,804.63 8th Applicant – A/c.No:67104336492 [SBT] :Rs. 67,35,87,180.00 9th Applicant – A/c.No:19040610000991

PNB 10th Applicant – A/c.No:0286300020518 :Rs. 49,28,59,782.00

------------------------ Total Principal =

:Rs.791,60,60,967.79

------------------------

Interest at 11% p.a compounded at monthly rests for all the Applicants:

A-1 From 01.04.2014 to 31.08.2018

:Rs.76,65,55,002.00

A-2 From 28.03.2016 to 31.08.2018

:Rs.16,13,32,454.00 - Now merged with A1 Bank A-3 From 21.09.2015 to 31.08.2018

:Rs. 20,64,09,541.84

A-4 From 30.04.2014 to 31.08.2018

:Rs. 19,02,20,379.00

A-5 From 31.03.2015 to 31.08.2018

:Rs. 4,41,59,605.00

A-6 From 31.05.2016 to 31.08.2018

:Rs. 42,98,88,066.00 – Now merged with

PNB A-7 From 31.07.2016 to 31.08.2018[SBBJ] :Rs. 17,05,59,452.10

A-8 From 31.07.2016 to 31.08.2018[SBT] :Rs. 17,16,43,693.46

A-9 From 31.12.2015 to 31.08.2018

PNB A-10 From 30.09.2013 to 31.08.2018

:Rs.39,43,47,483.30

------------------------ Total Interest =

:Rs.281,85,49,771.70

------------------------ Grand Total [Principal + Interest] =

:Rs.1073,46,10,739.49

1.16 Therefore, it is prayed in the OA for an order/certificate of recovery for a total sum amounting to Rs.1073,46,10,739.49 [Rupees One Thousand Seventy Three Crores Forty Six lakhs Ten Thousand Seven Hundred Thirty Nine and Paise Forty Nine only] towards the Term Loan accounts of each Applicant described in para V[24] together with future interest at 12% p.a. (normal interest at 11% plus penal interest at 1%) and compounded with monthly rests from 01.09.2018 till date of realization of the entire dues; jointly and severally against the defendants 1 to 3 and other reliefs.

2.0 CASE OF DEFENDANTS:- The Ld. Predecessor issued summons to the Defendants. All the defendants are served. The Counsel for D1, D3, & D5 to D10 appeared at the first instance and that a submission was made on 19.01.2021, that the WS is filed. The defendants D2 & D4 remained unrepresented despite service. They were placed exparte on 18.08.2022.

2.1 The matter is transferred to this Tribunal from DRT-III. This Tribunal directed fresh notices to such of the contesting defendants. The bank has taken notice by Registered Post. None appeared for the defendants on 17.11.2022. 2.2 It is to be noted that the Ld. Counsel for the Defendants 1, 3, 5 to 10 had withdrawn his vakalathnama by filing proper affidavit citing non - co-operation by the defendants to defend their case. The WS was to be filed as per the order dated 13.02.2019. However, the same was not filed till 07.01.2021. It is on record that a WS is filed on 07.01.2021 by one Pradeep Kumar Katyal who claimed to be the authorised representative of D1, D3 and D5 to D10. After filing of the WS these defendants remained unrepresented despite fresh notice taken by the applicants upon transfer of this matter to this Tribunal. There is no WS on the part of other defendants.

3.0 GIST OF WS OF D1, D3 & D5 TO D10:- The defendants who have filed their WS claimed that the applicant banks have already sold their debt to an Asset Reconstruction Company named as J.C. Flowers Asset Reconstruction Pvt. Ltd. which fact is suppressed according to them. The same is sought to be dismissed as not maintainable. The Industrial Loan repayment is dependent on surplus generation of the running industry. If the business suffers loss, neither the interest can be paid nor the loan. The Officials of the banks have not followed the RBI Guidelines. The D1 Company executing a project is entitled for adequate care and attention during the difficult situations as mentioned in the RBI Guidelines issued since 1976. The creditors utterly failed to abide by the guidelines. 3.1 It is contended by these defendants that the applicant banks have not reflected true accounts and the statement of accounts does not show the quantum of interest charged and therefore the same is false and incorrect. The Statement of Accounts is false and not supported by a proper certificate as per the Bankers Book Evidence Act. The rate of interest is not justified with material particulars for changing the varying rate of interest, penal interest, etc. The documents relied on by the Banks are not properly signed, executed and certified. The Banks have wrongly classified the account as NPA without observing the guidelines, rate of interest is exorbitant and harsh. The documents produced by the banks are the misused signatures, which were obtained on printed formats and that no opportunity was given to the defendants to read, understand and accept the same. Therefore, the loan documents are denied as never agreed. There is no cause of action. The entire pleadings are vague, unspecific and does not give any cause of action. It is contended that Defendant No.1 is a special purpose company and it has no cash flow revenue. It admits that the concession agreement which comprises the loan documents. 3.2 It is further contended that the stoppage of work in the project was due to the State Government and that NHAI had committed breach of not securing the State Government approval which has culminated into the termination of concession agreement. The other allegations are denied. As regards the facts leading to filing of the case, the defendants have taken a stand that they are matter of record and needs no reply. They contend that the agreements are one sided and the defendants had no bargaining power. The amount claimed is highly exaggerated. It is denied that as per the letter of undertaking dated 01.11.2009, the 3rd Defendant is liable to the payment of dues by the 1st Defendant. The repayment of the loan was agreed to be based on the toll collections after completion of the project and since the project is stopped, one arbitration case is also filed. There is no other source for repaying the debt. The allegation that the Defendant No.1 Company had committed default in alienation of the non-current assets like plant and equipment is denied as false and incorrect. The termination notice was issued by Defendant No.1 on 18.01.2006. Thus the defendants have sought for dismissal of the OA.

4.0 EVIDENCE ON RECORD:-

4.1 To prove their point, the applicant banks examined AW1, who had also relied on voluminous documentary evidence, which is as under:- Sl. No. Date Description Exhibit Number

1. 02.02.2009 & 16.02.2009 Memorandum /Articles of Association Association and Certificate of Incorporation Ex.A-1.

05.10.2018 Latest list of Directors Ex.A-2

3. 05.10.2018 Company Master Data – revealing subsisting charge with ROC, Hyd. Ex.A-3.

4. 04.11.2008 Letter of pre-qualification Ex.A-4.

5. 06.01.2009 Letter of Award Ex.A-5.

6. 21.02.2009 Resolution – to perform the obligations of D-3 in the project Ex.A-6.

7. 18.05.2009 Concession Agreement Ex.A-7.

8. 29.09.2009 Letter of Sanction Ex.A-8.

9. 02.11.2009 Inter – Creditor Agreement Ex.A-9.

10. 02.11.2009 Common Loan Agreement with three resolutions dt.15.10.2009 Ex.A-10.

11. 31.03.2015 Supplementary No.1 to Common Loan Agreement Ex.A-11.

12. 02.11.2009 Consent Agreement with resolutions dt.08.10.2009 Ex.A-12.

13. 02.11.2009 Letter of Undertaking Ex.A-13.

14. 02.11.2009 Lender’s Agent Agreement Ex.A-14.

15. 02.11.2009 Security Agent Agreement Ex.A-15.

16. 02.11.2009 Confirmation Letter to Inter-Creditor Agreement Ex.A-16.

17. 02.11.2009 Memorandum of Operative Procedure Ex.A-17.

18. 31.03.2015 Amendment to Memorandum of Operative Procedure Ex.A-18.

19. 02.11.2009 Deed of Hypothecation Ex.A-19.

20. 02.11.2009 Agreement for pledge of shares Ex.A-20.

21. 02.11.2009 Letter of Deposit of Share Certificates Ex.A-21.

22. 02.11.2009 Power of Attorney – reg. shares Ex.A-22.

23. 30.12.2009 Substitution Agreement Ex.A-23.

24. 04.01.2010 Escrow Agreement Ex.A-24.

25. 16.04.2010 DBC – bal. as on 31.03.2010 Ex.A-25.

26. 18.07.2012 DBC – bal. as on 31.03.2012 Ex.A-26. 26A. 02.11.2012 Revival Letter Ex.A-26A.

27. 03.04.2013 DBC – bal. as on 24.02.2013 Ex.A-27.

28. 25.09.2013 DBC – bal. as on 25.09.2013 Ex.A-28.

29. 30.08.2014 DBC – bal. as on 08.08.2014 Ex.A-29.

30. 25.01.2016 DBC – bal. as on 24.01.2016 Ex.A-30.

31. 27.12.2016 DBC – bal. as on 30.11.2016 Ex.A-31.

32. 01.09.2017 Audited Balance Sheet as on 31.03.2017 Ex.A-32.

33. 29.03.2012 Letter – TNWRD – stoppage of work in the project Ex.A-33.

34. 23.12.2015 02.09.2016 25.10.2016 25.01.2017 17.05.2017 Letters calling for payment of over dues Ex.A-34.

35. 06.02.2018 Independent Engineer’s Report Ex.A-35.

36. 08.03.2018 Minutes of JLM Ex.A-36.

37. 14.07.2018 Lawyer’s Notice with ack. cards Ex.A-37. 37A. --- Term Loan Summary Ex.A-37A.

38. 05.10.2018 Escrow Account [CD-Gen-262] – Statement – 01.10.2010 to 02.08.2016 Ex.A-38.

39. 05.10.2018 Escrow Sub-Account-Construction Fund A/c. [CD-Gen-263] – Statement – 10.02.2010 to 18.09.2018 Ex.A-39.

40. 29.08.2018 Account Statement Ex.A-40.

41. 14.08.2018 Account Statement Ex.A-41.

42. 01.09.2018 Account Statement Ex.A-42.

43. 24.09.2018 Account Statement Ex.A-43.

44. 24.09.2018 Account Statement Ex.A-44.

45. 07.09.2018 Account Statement Ex.A-45.

46. 30.08.2018 30.08.2018 Account Statement [SBBJ] & [SBT] Ex.A-46.

47. 06.09.2018 Account Statement Ex.A-47.

48. 31.08.2018 Account Statement with relevant Certificates Ex.A-48.

49. 15.02.2022 Authorization Letter Ex.A-49

4.2 AW1 N.Satyanarayana Babji, the Assistant General Manager of the 1st Applicant Bank - the leader of the Consortium Bank Deposed to the facts as pleaded in the OA, in his affidavit filed before the Ld. Predecessor.

4.3 Certain documents were marked in support of the averments. This witness is not cross-examined by the defendants.

4.4 On the day of evidence, there was no representation for defendants 2 & 4 and were placed exparte. It was also adjourned for the purposes of counter proof affidavits of D1, D3 and D5 to D10. Thereafter the matter was transferred to this Tribunal and the matter was posted for CPA with a direction to the applicant bank to intimate the defendants of the next date of hearing before this Tribunal upon the transfer of this matter.

4.5 The Ld. Counsel for the applicants submitted that the evidence of AW1 may be read as conclusive evidence of the applicant banks and submitted that there are no other witnesses. Therefore, the evidence on the part of the applicant bank is treated as closed. Since the defendants have not filed their CPAs the opportunity was closed and the matter is kept for arguments as there is no evidence on the part of the defendants.

5.0

POINTS FOR DETERMINATION:-

Based on the above pleadings, the only point that arises for consideration is:- Whether the applicant banks are entitled for the recovery of the sum as prayed for in the OA?

If so what relief?

6.0 With the available evidence on record, this Tribunal has to answer the points for determination. The Ld. Counsel for the applicant bank submits that the sanctioning of the project and the defendant No.1 approaching the financial institutions are not denied. It is also argued that the defendants having admitted the transaction can not deny the liability.

7.0 ANSWERS TO THE POINTS FOR DETERMINATION:- 7.1 After perusal of the affidavit and the written statements filed by the contesting defendants, the genesis of the transaction namely the conceiving of the project by the 2nd Defendant and the 3rd Defendant having been qualified to the expression of interest and further floating the special launch vehicle i.e. the 1st Defendant Company are all admitted. The defendants had only taken up the contention that the accounts statement is not correct and that the defendants had signed the blank papers without having an opportunity to go through the contents. The defendants who had admitted to the transaction of loan having been granted and that their taking up the project as per the NHAI orders and further approaching the applicant banks.

7.2 It is seen from the Para-14 of the affidavit that the deponent on behalf of the applicants had expressly stated that out of the sanctioned loan amount of Rs.1610 Crores, the defendant No.1 had availed around Rs.852 crores. It is also averred that the default occurred on account of nonpayment of dues. There was a demand notice. It is also averred that the first applicant bank as leader of the consortium and the lenders agent issued a notice dated 14.07.2018 demanding the dues amounting to Rs.1034,22,12,558.74p as found due on 30.04.2018. No payment was demanded against the 4th defendant. These averments go unrebutted.

7.3 The accounts statements are not controverted or rebutted by the contesting defendants. The witness is not cross examined. The Defendants have also not led any rebuttal evidence to demolish the say of the witness as regards the amount falling due to be paid by the defendants. The say of the witness AW1 N.Sathyanarayana Babji at paras 20 of the affidavit clearly speaks of the amounts due as on 31.08.2018. The total

principal amount unpaid and the interest accrued thereon are distinctly mentioned in the affidavit at Para-20 of the affidavit. These amounts are matching with the account statements produced by way of documentary evidence. In view of the above, the defendants D1, D3 & D5 to D10 who have taken a stand that the accounts are reeking with defects have not come forward to prove their stand by way of documentary evidence. The only stand of the defendants 1, 3 & 5 to 10 is that: “they deny the claim of the banks as of 31.08.2018 and the same is further denied as at 1073,46,10.739.49p is not the due. This contention is not proved on record by the defendants. The defendants did not discharge the burden of proof of their contentions.

7.4 Furthermore the Ld. Counsel for the applicants during the course of arguments had placed a copy of the arbitral award obtained by the 1st Defendant Company against the 2nd Defendant namely the National Highways Authority of India. The said award is by the Ld. three arbitrators presided by Shri. Raghav Chandra. The defendant No.1 has succeeded in getting an award in the arbitration proceedings initiated by them against the 2nd Defendant. The award is dated 24.11.2021 between CETL and NHAI at New Delhi by the Arbitral Tribunal Comprising Shri.Raghav Chandra, (Presiding), Dr.A.Didar Singh, (Arbitrator); Dr.B.S.Singla, (Arbitrator).

7.5 The opening line of the award speaks of the project that was conceived by the 2nd defendant which ultimately stood incomplete. It further observes that: “Despite having initiated the project as a joint endeavour of Chennai Port Trust and the State and Central Governments, the subsequent obdurate and recalcitrant attitude of the Tamilnadu State Government, at a crucial time of the project execution, caused the project to get derailed. This unfortunate situation could have been avoided if the mutual rights and obligations between the Central and the State Governments had been clearly spelt out and suitably codified prior to launch of the Project, with appropriate penal provisions being embedded in the agreement to deter any unilateral stand of the State Government - as in this case that had a severely shocking impact - that of sending the project on an irretrievable tailspin, leading to a long chapter of litigation and hefty financial claims culminating in this arbitration.(Para-286)”

7.6 It is seen that as per the Schedule VIII of the Common Loan Agreement [Ex.A-10] the loan provided by the members of the consortium viz., the Applicant Banks shall bear interest at 11% fixed from the date of initial disbursement to COD [Commercial Operation Date]. This apart in terms of clause 2.6[iii] of the said agreement, Default Interest at 1% p.a. can be charged. Further, in terms of clause 2.6[iv] of the said agreement Deviation Fee at the rate of 1% on the outstanding amount, during the period of deviation, can be charged. Again in terms of clause 2.6[v] of the said agreement a Commitment Fee at the rate of 1% can be charged. The Concession Agreement [Ex.A-7], vide its Clause 37.2.1, provides for termination of it on account of [Authority Default] viz., the 2nd Defendant’s default. So also, the Concession Agreement, vide its clause 37.1 provides for termination of it on account of Concessionaire’s default. In terms of clause 37.3.2[a] of the Concession Agreement, the 2nd Defendant shall pay to the 1st Defendant an amount equal to the debt due, due to Authority’s default.

7.7 It is an admitted fact that the construction work of the project [Sec.1] was stopped on 29.03.2012, consequent to the stop order issued by the Water Resources Department of the Government of Tamilnadu. After the stoppage of work the 1st Defendant, issued termination notice as per clause 37.2.1 of Concession Agreement on 18.01.2016 on the 2nd Defendant. So also, the 2nd Defendant served a notice of termination on the 1st Defendant on 08.04.2016. The 4th Defendant has upheld the validity of the termination notices issued by both the 1st and 2nd Defendants vide clause 5.1 of its report dated 06.02.2018. Accordingly, the 4th Defendant has worked out the amount payable by the 2nd Defendant to the 1st Defendant by a sum of Rs.807.16 crores vide clause 9.3 of its Report dated 06.02.2018. It also arrived at the amount payable by the 1st Defendant to the 2nd Defendant and the same is stated to be Rs.108.46 crores as per clause 9.4.6 of the said report. In the circumstances, the 2nd Defendant is liable to pay Rs.807.16 crores to the 1st Defendant. These facts are evidenced by Ex-A-35 which is a photocopy as the original has been delivered to 2nd Defendant and the copy only was served to the Applicants. In any case, the 1st Defendant by virtue of the Common Loan Agreement and Supplement No.I to the Common Loan Agreement; the 2nd Defendant by virtue of the Authority’s default as upheld by the 4th Defendant herein and the 3rd Defendant by virtue Clause 3[a] & [b] of its stamped undertaking dated 02.11.2009 have become liable jointly and severally to pay the debt due to the Applicant banks. These facts are admitted by the contesting defendants.

7.8 The Ld. Counsel for the applicant submits that the Defendant No.1 is liable to pay the amounts as per the documentary evidence at Exh.A8. It is also submitted that the Defendant No.2 is also liable as per the clause 37.3.2, which reads as follows:- “37.3.2 Upon Termination on account of an Authority Default, the Authority shall pay to the Concessionaire, by way of Termination Payment, an amount equal to:

(a) Debt Due; and

(b) 150% (one hundred and fifty percent) of the Adjusted Equity.” As per the Concession Agreement – “Concessionaire” is the Defendant No.1 and “Authority” is the 2nd Defendant. 7.9 Defendant No.2 is also liable in view of the appointment of independent engineer as per Para 23.1 of the concession agreement. It is also argued that valid termination notice for the Authority Default were issued and consequently as per clause 9.3 of the opinion of the independent engineer, the Defendant No.2 is liable to pay to Defendant No.1. Exh.A48 is the account statement with relevant certificate issued under the Bankers Book Evidence Act. This document is marked as Exh.C1 since Registrar, DRT-II, Chennai to whom the matter was kept for marking had omitted marking of the same. It is also seen that Exh.A35 is the report of the independent engineer is not disputed in the written statement of Defendants 1,3 & 5 to 10. .

8.0 After going through the oral and documentary evidence, the only defense taken by the contesting defendants is that the account statements maintained by the Bankers are not correct and that they have signed the documents without proper knowledge. The same cannot be accepted for the reasons that the Defendant No.1 is the child of Defendant No.3 who came out successfully in the expression of interest called for by the 2nd Defendant. The same has taken considerable time as could be seen from the chronology of events. A certificate of incorporation of the 1st Defendant Company is 02.02.2009 and 16.02.2009 at Hyderabad, the same was consequent to the letter of award dated 06.01.2009. The concession agreement between D1 & D2 is dated 18.05.2009, which is very bulky document is running from Pages 87 to 237 annexed with the OA. As per the concession agreement, the credit facility was given on 29.09.2009 by the Union of India i.e. Applicant No.1, it is seen that nearly four months have taken from the execution of concession agreement to sanction the credit facilities. Thereafter the parties have taken sufficient time and the common loan agreement which is produced as Exh.A10 dated 02.11.2009 shows that the contesting defendants had enough time and they have gone through the contents of the same. Furthermore, the same seems to be a product of proper legal consultation by professional law service agency and execution of these documents are not disputed. The common loan agreement provides for events of defaults. The default on the part of the borrowers provide for the consequential default which is at Para7.2 which reads as follows:- “CONSEQUENCES OF DEFAULT If one or more of the aforesaid Events of Default shall occur and be continuing, thereupon and in every such event and at any time thereafter during the continuance of such event, the Lenders shall have the right to terminate their commitments and accelerate the Obligations of the Borrower and in exercise of such rights the Lenders may, take one or more of the following action:

(i) Give written notice of an Event of Default, in which case all commitments and the Lenders’ obligations to make Loans, shall be terminated forthwith,

(ii) Declare the unpaid principal amount of and interest in respect of the Loans and all other Obligations and all other amounts payable by the Borrower hereunder and under the Security Documents to be forthwith due and without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding.

(iii) Exercise any and all rights specified in the Security Documents and other Transaction Documents including, without limitation, to accelerate the obligations of the Shareholder/Promoter to make equity and other contributions and to enforce all of the Security created pursuant to the Security Documents and

(iv) Exercise such other remedies as permitted or available under Applicable Law.”

8.1 Further more, it is to be noted that the defendants who have taken the contention that they have signed the documents in blank and that they are not liable did not contest and had not led any evidence to substantiate their stand. From the common loan agreement and further considering the Exh.A48, which is the documentary evidence to show the amounts due is proved by a certificate duly issued under the Bankers Book Evidence Act, this Tribunal does not find any material to deny the claim of recovery made by the applicant banks.

9.0 In the result, the application for recovery is allowed with costs and:

(a) The Defendants D1 to D3 are hereby directed to pay jointly and severally the total sum of Rs.1073,46,10,739.49 [Rupees One Thousand Seventy Three Crores Forty Six lakhs Ten Thousand Seven Hundred Thirty Nine and Paise Forty Nine only] towards the Term Loan accounts of each Applicant detailed here under together with future interest at 12% p.a. (normal interest at 11% plus penal interest at 1%) and compounded with monthly rests from 01.09.2018 till date of realization of the entire dues; 1st Applicant –

Rs.320,93,75,256.00 2nd Applicant -

Rs. 81,52,98,778.84 3rd Applicant -

Rs. 69,27,24,232.16 4th Applicant -

Rs. 62,56,36,751.00 5th Applicant -

Rs.258,80,38,450.30 6th Applicant [SBBJ] - Rs. 83,96,81,256.73 6th Applicant [SBT] - Rs. 84,52,30,873.46 7th Applicant -

Rs.111,86,25,141.00

(b) It is further ordered that in case of default of payment by the defendants, the applicant banks are entitled to sell the application schedule mentioned properties in the OA in terms of the order in para (a) supra and appropriate the sale proceeds towards the amount due.

(c) It is also ordered that any other amount remitted or realized, if any, during the course of the proceedings, shall be given due credit to the loan account of the defendants.

10.0 The applicant bank is directed to file costs memo within two weeks of the receipt of this order.

11.0 Issue recovery certificate in favour of the applicant bank in terms of this final order.

12.0 Communicate a copy of the order to the parties concerned in terms of Rule 16 read with Rule 2(c) of DRT (Procedure) Rules, 1993.

Sd/-

(A.S.JAYACHANDRA)

PRESIDING OFFICER

DRT-I, CHENNAI

(Dictated to PS on the system corrected, signed and pronounced by me on this 2nd day of February, 2023)